OMG, Depreciation and ammortisation are for writing off assets or even Development/IP over time... I am referring to the equity that was poured in over-zealously... to the tune of $50m by public shareholders.
So forget what you are reading about amortisation and depreciation, you cannot amortise or depreciate equity, so just forget the "D" and the "A" out the window... this is all about the future value of "I".
Do you not understand, that currently they dont pay tax, as they lose money, and they don't incur pretty much any interest as they aren't providing a return on funds to equity holders, invested.
Most finance companies have whats called a debt waterfall, from equity through senior then jnr, mezz etc, and equity holders are paid a margin over BBSY on the funds invested... So the money isn't just shoved back into the slush fund as core equity, for free. Clearly this is beyond you, but its not being applied to the $50m of equity sitting in AFY... its Free money. Do you understand, as they grow, they will have to pay a tonne of interest on borrowed funds, so using EBITDA as a measure of value for a finance company is like valuing an ordinary business on a multiple of revenue pre COGs.
Look at Zip, they probably have close to $10m in interest cost, as they don't have a lazy $50m sitting on their balance sheet, you are completely ignoring this inherent cost that will become real in the near future.
@dubspec @AllFuelledUp can I be anymore explicit, or do we just let him ramble to himself from here on?
